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Gifts for home purchase and housing market behavior

Author

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  • Gary V. Engelhardt
  • Christopher J. Mayer

Abstract

Rapid increases in house prices can make home ownership more difficult for prospective first-time home buyers by increasing the required down payment amount and, if the increases outpace income growth, by increasing the ratio of mortgage payments to income. In response to such constraints, households may seek a gift or loan from a family member to use as part of the down payment. ; Family transfers for housing purchase may be useful in understanding the relationship between housing finance and housing markets. Gifts may play a critical role for some households in home purchase activity in real estate cycles. This article documents the frequency and magnitude of family gifts for housing purchase and explores economic explanations for their role in home financing.

Suggested Citation

  • Gary V. Engelhardt & Christopher J. Mayer, 1994. "Gifts for home purchase and housing market behavior," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 47-58.
  • Handle: RePEc:fip:fedbne:y:1994:i:may:p:47-58
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    File URL: http://www.bostonfed.org/economic/neer/neer1994/neer394d.pdf
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    Citations

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    Cited by:

    1. Case Karl E. & Quigley John M. & Shiller Robert J., 2005. "Comparing Wealth Effects: The Stock Market versus the Housing Market," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-34, May.
    2. Engelhardt, Gary V. & Mayer, Christopher J., 1998. "Intergenerational Transfers, Borrowing Constraints, and Saving Behavior: Evidence from the Housing Market," Journal of Urban Economics, Elsevier, vol. 44(1), pages 135-157, July.
    3. Heather M. Luea, 2008. "The Impact Of Financial Help And Gifts On Housing Demand And Cost Burdens," Contemporary Economic Policy, Western Economic Association International, vol. 26(3), pages 420-432, July.
    4. Gary V. Engelhardt, 1995. "House Prices and Home Owner Saving Behavior," NBER Working Papers 5183, National Bureau of Economic Research, Inc.
    5. Engelhardt, Gary V., 1996. "House prices and home owner saving behavior," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 313-336, June.
    6. Iwata, Shinichiro & Yukutake, Norifumi, 2013. "Housing subsidy or parental support: Crowding-out effect of mortgage tax deduction," MPRA Paper 46647, University Library of Munich, Germany.
    7. Andrew J. Filardo, 1996. "The outlook for housing: the role of demographic and cyclical factors," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 39-61.
    8. Christopher J. Mayer & Gary V. Engelhardt, 1994. "Gifts, down payments, and housing affordability," Working Papers 94-5, Federal Reserve Bank of Boston.
    9. Florencia Torche & Seymour Spilerman, 2006. "Parental Wealth Effects on Living Standards and Asset Holdings: Results from Chile," Chapters,in: International Perspectives on Household Wealth, chapter 10 Edward Elgar Publishing.
    10. Hilber, Christian A.L. & Liu, Yingchun, 2008. "Explaining the black-white homeownership gap: The role of own wealth, parental externalities and locational preferences," Journal of Housing Economics, Elsevier, vol. 17(2), pages 152-174, June.
    11. Donald Cox & Oded Stark, 2007. "On the Demand for Grandchildren: Tied Transfers and the Demonstration Effect," Chapters,in: Handbook on the Economics of Happiness, chapter 18 Edward Elgar Publishing.
    12. Turner, Tracy M. & Luea, Heather, 2009. "Homeownership, wealth accumulation and income status," Journal of Housing Economics, Elsevier, vol. 18(2), pages 104-114, June.

    More about this item

    Keywords

    Housing - Finance ; Mortgages;

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